I wouldn’t trade my college experience for anything. But I do wish I had handled my finances better.
Here are four smart money moves tips I wish somebody had shared with me when I was a college student.
- Never carry a balance on a credit card. Never charge more on a credit card than you can pay off that month. While getting and using a credit card wisely can help you build a credit history, using it poorly can create a history you’ll want to forget. A secured credit card might help you here.
- Keep money in the bank. No matter where it comes from — as long as it’s legal — money in the bank is your friend. Be kind to it and keep it around. Otherwise, you’re going to end up in debt every time something unexpected comes your way.
- Limit student loans. You may be presented with the opportunity to borrow more money than you actually need to go to college each semester. Do yourself a favor and politely refuse. Why? Because the less you borrow now, the less you have to pay back later. Only take what you need.
- Work if you can. It looks good on your resume. It helps you develop some “real world” balancing skills. And it gives you cash to help with the first two tips.
A solid educational foundation should be your main goal in college, but coming out with a solid financial foundation is pretty important as well.
August 25, 2014 | Scott Halliwell
USAA Certified Financial Planner Scott Halliwell (Coach Scott) uses a farmer’s field to explain the difference between Roth and Traditional IRAs.
July 2, 2014 | Scott Halliwell
Did your retirement train get knocked completely off the tracks as it passed through the Great Recession of 2008? If so, you’re not alone. Despite officially ending in mid-2009, our country’s most recent financial fiasco left countless retirement plans in ruins. Four years later, many people are just starting to get their bearings again. I know this because I get questions from them every day.
Many ran up debt, stopped saving, used their savings and investments, or in a panic, pulled their retirement investments from the markets. Sound familiar? While some of these moves were probably unavoidable or at least understandable, each one may have played a part in derailing your retirement train. But rather than dwell on the past, it’s time to move forward into recession repair mode.
Here are my six steps to get your retirement back on track.
1. Focus on logic, not emotion. We’re all human, and sometimes we indulge in a little self-pity when things don’t go our way. You may even be tempted to just give up. But what’s done is done. Now is the time to get busy and move forward. The longer you wait, the harder it will be to take the initiative and regain the momentum.
2. Assess your situation. Before you can begin moving forward, you’ve got to be honest about where you’re starting. Critically assess your situation. Look at your lifestyle and cash flow for places to adjust so that you’re spending less than you earn. Ask yourself, “If I keep spending at the same level, will I be able to save enough to get back on track, or do I need to make some changes?” Bottom line: Get a firm, honest handle on where you’re sitting.
3. Fix whatever needs fixing. If the recession left you in a financial hole, get busy digging out and rebuilding a solid financial foundation. For many people this will mean reducing consumer debt and rebuilding emergency savings. To make this happen, you’ll have to cut expenses or find additional income — or do some combination of the two. If cutting costs is your answer, make sure you rein in your spending enough so that you have extra money to either pay off high-interest-rate debt or save and invest.
4. Revisit your retirement vision. Once you know where you stand, you then need to take a serious look at whether your former retirement vision is still a possibility. Maybe you’ll now have to work a bit longer or live on a bit less. The key is to set a realistic vision based on where you sit today, not where you sat five years ago. Not looking good? Refer to step 1 and then create a new vision for yourself.
5. Figure out how to make your plan happen. Now that you’ve got a revamped vision in place, you’ll need to do some number crunching to see what it will take to pull it off. And what if the numbers just don’t work even with an adjusted retirement vision? Adjust it again. Remember, you’re trying to build a realistic plan that you can achieve, not strive for something destined to fail.
6. Play catch-up. Finally, one of the best ways to make up for lost time is to simply use new money more wisely. If you get a pay raise, put it toward your retirement instead of letting it add to your lifestyle. Tax refund? Use it. Bonus? Use it. Sold something? Use it. Car paid off? Use it. Take any extra money and use it to strengthen your financial and retirement plans.
Recessions stink (that’s a technical term). And Great recessions stink even more. But here’s the thing: Recessions and other financial setbacks happen all the time. The sooner you assess the damage and develop a plan to get yourself back on track, the sooner you’ll be able to get the train rolling again.
February 10, 2014 | Scott Halliwell
Though it seems like forever ago that I was a wide-eyed 18-year-old headed off for college (maybe because it was?), I can still vividly remember my sense of excitement. The mountain was mine to climb!
And while I wouldn’t trade my college experience for anything, there are a few things I wish I’d done differently … well, lots of things, actually. At the top of the list? I wish I’d made better financial decisions (let’s just say financial wisdom wasn’t always my strong suit). Like many students, I made some really dumb decisions that almost put me under the mountain instead of on top of it.
So with that water long since under the bridge, here are four tips I wish somebody had shared with me when I was a college student.
1. Never carry a balance on a credit card.
This one is simple for most college students: Never charge more on a credit card than you can pay off that month. While getting and using a credit card can help you start building your credit history, using it poorly can create a type of history you don’t want. Bottom line here, if you don’t have the money in the bank to pay for it, don’t charge it. Seriously.
2. Keep money in the bank.
Whether it comes from summer work, a job while in school, graduation gifts or the ongoing love of your dear Aunt Sallie, money in the bank is your friend. In other words, be kind to it and keep it around. Whether you’re in college, the military, or civilian life, having money in the bank is one of the best things you can do to help you avoid going into debt.
3. Limit student loans.
Paying for college can be tough, and student loans are one way to make it work for a lot of students. Unfortunately, many of these students will be presented with the opportunity to borrow more money than they actually need to go to college, and even though they don’t need it, they’ll take it anyway simply because they can. So this brings me to a very important point about student loans that should never be forgotten — they’re loans! Meaning at some point, you’ll have to pay them back. It may sound fairly obvious, but the less you borrow now, the less you’ll have to pay back later. So whatever you do, don’t take students loans just because you can. Only take what you need.
4. Work if you can.
A lot of college students will find summer jobs to earn a few bucks, and I think this is great. However, I also think it is valuable to work during school if possible. Yes, it creates the extra stress of having to balance school and work, but that stress and experience can be very valuable on a number of fronts: 1) It looks good on your resume when you start looking for jobs after graduation; 2) It helps you develop some “real world” balancing skills that you can use for a lifetime; 3) It gives you extra money to help with my points of keeping cash in the bank and avoiding debt; and 4) Who knows, you might even stumble into a career area that has appeal!
Though coming out of college with a solid educational foundation is the main goal of college, coming out with a solidfinancial foundation is pretty darn important as well. If you know someone with the prestigious title of college freshman, sophomore, junior, senior or grad student, please share this information with them so that they might come out with both.
This content is provided courtesy of USAA.
August 6, 2013 | Scott Halliwell